Highlights From the Ontario Minister of Energy’s 2025 Letter of Direction to the OEB

On December 19, 2024, Ontario’s Minister of Energy and Electrification (Minister) issued his 2025 Letter of Direction to the Ontario Energy Board (OEB). The Letter of Direction sets out the Minister’s expectations for the OEB and the energy sector for the upcoming three-year planning period.

The expectations set out in the Letter of Direction are consistent with recent policies, announcements, directions and legislation from the Ontario government. For example, the Letter of Direction makes frequent mention of the Ontario government’s latest energy policy statement: Ontario’s Affordable Energy Future: The Pressing Case for More Power. As described in our recent post, the policy statement sets out plans to meet growing electricity demand with a “pro-growth agenda that takes an all-of-the-above approach to energy planning, including nuclear, hydroelectricity, energy storage, natural gas, hydrogen and renewables and other fuels.”

The Letter of Direction highlights three areas where the Minister expects “significant progress over the coming year”: Planning for Growth; Affordability, Customer Choice and Modernization; and Regulatory Support to Implement Ontario’s Affordable Energy Vision. Specific expectations and deliverables are identified for each area. Below are several key items included in the Letter of Direction.

• Ontario’s First Integrated Energy Plan: The Ontario government is in the process of developing the province’s first long-term Integrated Energy Plan, to be released in 2025. An Integrated Energy Resource Plan Consultation was posted on the Environmental Registry site, asking for feedback and answers to “guiding questions” for the government to consider in its first plan. The Letter of Direction indicates that the OEB will be a “key partner” in providing input and then implementing the Integrated Energy Plan. Among other things, the OEB is directed to:
  • Assist with an implementation directive to the OEB that sets out the government’s expectations of the OEB and regulated utilities in relation to the plan.
  • Ensure that OEB-regulated utilities conduct and contribute to comprehensive and reliable planning across all fuel types to ensure the system is equipped with affordable and reliable energy to support broader government objectives such as economic growth.
• Last Mile Connections: The Ontario government is focused on enabling construction of new homes and businesses by making it easier to connect to the electricity grid. The Letter of Direction indicates that the Minister “will be proposing regulations that would, if approved, reduce the upfront capital cost burden on first-mover connection customers and enhance site readiness and investment attraction at strategically significant (non-network asset) locations where future load is highly likely to materialize.” The OEB is directed to work with stakeholders to consider how the “beneficiary pays” principle can best be modified or applied to ensure fairness and minimization of wasted costs.
• Keeping Energy Costs Down Act Implementation: The Minister emphasizes that “Ontario needs an economically viable natural gas network to attract industrial investment, drive economic growth, to maintain customer choice and ensure overall energy system resiliency, reliability, and affordability for families, farmers, and businesses to support a transition to a clean energy economy.” Among other things, the OEB is directed to carefully consider the government’s upcoming Integrated Energy Plan and natural gas policy statement to ensure that the OEB’s policies and processes “appropriately consider the role of natural gas in Ontario’s energy system to manage energy system costs, ensure reliability and support customer choice.”
• Advancing Non-Wires Alternatives (NWAs) and Future Utility Business Models: The Letter of Direction emphasizes that “innovation in both natural gas and electricity sectors is critical to meeting our goals of meeting future energy demand.” Among other things, the Minister expects that the OEB will:
  • Provide incentives to utilities to implement non-wire solutions that benefit customers (e.g., Distributed Energy Resources (DERS)/NWAs).
  • Consider any further guidance, direction or new incentives the OEB can implement to support utilities in growing the use of shared services, as appropriate.
  • Lead the work to develop and assess local and market opportunities for DERs, including through alternative energy business models (e.g., Distribution System Operator capabilities).

We will continue to monitor and report upon developments and implementation stemming from the Minister’s 2025 Letter of Direction to the OEB.